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Campbell Enters Into Agreements To Expand Its Production And Distribution Capabilities In Mexico

Stocks in this article: CPB

Campbell Soup Company (NYSE:CPB) announced today that it has entered into commercial arrangements with Grupo Jumex and Conservas La Costeña that will expand the company’s access to manufacturing and distribution capabilities in Mexico for its beverages, soups, broths and sauces.

Grupo Jumex, the largest producer of fruit juices and nectars in Mexico, will manufacture and distribute Campbell’s “V8” portfolio throughout the Mexican market. Conservas La Costeña, one of the largest producers of prepared foods in the country, will manufacture and distribute “Campbell’s” soups, broths and Italian sauces. Under the terms of its agreements with each partner, Campbell will retain responsibility for consumer marketing, product research and new product development. Financial terms were not disclosed.

Denise Morrison, Campbell’s President and Chief Executive Officer, said, “We are delighted to be working with Grupo Jumex and Conservas La Costeña – outstanding companies with long and distinguished histories – in a market that offers Campbell exciting avenues for growth. Our arrangements with these new partners will increase our access to customers and enable us to reach new consumers for our products. We believe that they will redefine the scope of our business opportunities in Mexico.”

Mexico is a growing market with more than 112 million people. Annual sales of non-carbonated beverages in Mexico are at $3.5 billion today, and are currently growing at approximately 6 percent per year. Campbell’s beverage business constitutes the largest part of the company’s portfolio in Mexico and has grown steadily over the past several years.

Currently, Campbell employs approximately 330 people in Mexico. As a result of entering into these agreements, Campbell will close its plant in Villagrán, Mexico, and eliminate approximately 260 positions. The company plans to retain approximately 70 positions in R&D, sales, supply chain, marketing and general management. Production from the Villagrán facility will be transitioned to Grupo Jumex and Conservas La Costeña facilities in phases through September 2013. Campbell anticipates that it will record a restructuring charge of $9 million ($6 million after tax) related to this initiative, most of which will be incurred in the second quarter of fiscal 2013.

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